PROBLEM 3-16 Comprehensive Problem (16) LO3-1, (1) LO3-2, (16) LO3-4 Gold Nest Company of Grandone. China, is a family -onned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extencive network of street vendors who receive commissions ca their sales. The company uses a job-order costing system in which overbead is applied to jobs on the basis of direct labor cost. Is predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overbead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: During the year, the following transactions were completed: 2. Raw materials purchased on account, $275,000. b. Rew materials used in production, $280,000 (materials corting $220,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for emplojee services were incurred as follow: d. Reat for the year was $18,000 ( $13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $57,000. f. Advertiring costs incurred, $140,000. 2 Depreciation recorded on equipment, $100,000. ( $88,000 of this amount related to equipment used in factory operations, the temaining $12,000 related to equipment ured in vellint and administrative activities ) h. Manufactaring overhead cost was applied to jobr, 5 ?. i. Goods that had cost $675,000 to manufactare according to their job cost sheets were completed. i. Sales for the year (dil paid in canh) tocwed $1,250,000. The tocal cont to manufucture these goodr according to their job cont abeets was $700,000. Required: 1. Prepare journal entries to record the trannactions for the yeer 2. Pregare T-accoants for each inventory account, Manufacturing Ovechead and Coct of Goods Sold. Post relevant data from jour journat entries to these Trecounts (doo't forget to enter the bejinning bulances in jour inventory sccounts). Compute an ending balance in each account. 3. Is Manufacturing Ovechead underapplied or overapplied for the jeat? Prepare a journal entry to close any balance in the Manufacturing Ovetheed account to Cost of Goods Sold. the income statement is avilable in the joumal entries und T-eccounts you have prepared) Pay 136